On Wednesday morning February 20 at 06:45, I was standing on the Gautrain Rosebank station platform in Johannesburg.
It was budget day, and I was on my way to Pretoria for the lock-up.
South Africa’s issues are well-known. Dire economic growth, fiscal slippage, Eskom’s massive debt burden, the ballooning government wage bill … the list goes on.
I wondered what you’d say. The election is less than three months away, unions are angry about Eskom’s unbundling and Moody’s is the only rating agency that still regards South Africa’s local currency debt as investment grade. Some say a downgrade is inevitable. At the same time there have been reports that you will leave your post after the election. That you are uninterested in what is happening at Treasury. How would these developments influence your speech? Would they?
I arrived in the Pretoria CBD shortly before 08:00. Our phones were taken away and we got copies of all the budget documents and your speech.
I started reading.
From plums to prickles
Unlike one of your predecessors, Trevor Manuel, who handed out plums to MPs during boom times, you likened the country’s dire economic situation to the Aloe ferox plant. It is resilient, you said. Sturdy and drought resistant, and that we had to take the bitter with the sweet.
Reading your speech, I wondered if it would change by 14:00. Your candid prepared comments were bound to step on toes.
“Isn’t it about time the country asks the question: do we still need these enterprises?” you said, referring to state-owned enterprises (SOEs). “If we do, can we manage them better? If we don’t need them, what should we do?” you asked.
When a journalist later pressed you to answer your own question during a press conference, you stressed that a conversation was necessary, but said that when business units don’t work in the private sector, they shut down. There is no emotional attachment. In government things work differently, but if you answered the question yourself there might be a strike tomorrow (today).
You said you liked using the railway system when you travel in Europe. You said that if you had your way money would go to railways and taxis, but that you were just one person.
In your prepared speech you said: “The National Government is not taking on Eskom’s debt. Eskom took on the debt. It must ultimately repay it.”
Fiscal support would be dependent on the appointment of an independent chief reorganisation officer (CRO) within SOEs.
In the press conference you likened the process to curatorship. You recalled your time as a board member at PPC, when banks took away your keys, as you put it. A CRO was appointed. I wondered if these comments wouldn’t be construed as too ‘pro-business’? But you seemed undeterred, also recalling your time at Discovery where CEO Adrian Gore decided on paperless board meetings, something you are now embracing as minister of finance.
Plum advice for SOEs
You had some frank comments for struggling SOEs wanting money: “You want money from us, we put you under curatorship. My advice to them: avoid the National Treasury.”
You proposed that a summit be held to debate the future of SOEs. It seems you feel that an emotional attachment to state-owned assets in a post-Soviet era is meaningless and that there is insufficient debate about the issue of disposing gas guzzler assets, as you put it. Yet even though government is seeking an equity partner for Eskom’s transmission unit, you echoed president Cyril Ramaphosa’s comments that privatisation is not on the cards.
Job creation is a sore point. So announcements around reducing the public sector wage bill could not have been easy. Early retirement is one thing, but limits on overtime and bonus payments and pay progression will be unpopular. Interestingly, you seem to think that we don’t have too many civil servants and need more police and nurses. The question is what the level of pay should be.
Not the type of comments that will warm the hearts of voters.
And yet, the country’s dismal growth figures and fiscal slippage won’t be welcomed by Moody’s either. You acknowledged that Treasury had “very, very difficult” conversations with rating agencies, which left you feeling “damned if you do, damned if you don’t”.
When journalists asked you about public protector Busisiwe Mkhwebane’s finding that director-general Dondo Mogajane failed to disclose a criminal record on his application form – the result of a speeding fine – and that remedial action should be taken against him, you indicated that there was a collective view in National Treasury that her findings were wrong, and that you would take it on review.
“The incumbent [Mkwhebane] is a problem,” you said.
Despite all the bad news, you were in good spirits, and said Mogajane is a good Christian. It seems the Biblical references in your speech were the DG’s doing.
It appears you were offended by a report suggesting you were not interested in your job. You referred former Business Day editor Peter Bruce, who wrote a column about it, to your oath of office, where you promised to perform your functions to the best of your ability.
When a journalist asked if you were available to serve as finance minister after the election, you said you had a deal with deputy president David Mabuza that if he wins the election, you could discuss it.
“I’ll be around for a while,” you said. “Don’t worry about that.”
I hope you are, Minister Mboweni. Things don’t look great at all, and even if we believe the steps you outlined are the right ones, it is not a given that they will be implemented. I expect major pushback.
But the candid way in which you dealt with the issues in your press conference has given me a glimmer of hope. The next few months will be tough. Good luck.